Job Market Will Get Back to Work
There are several clear reasons why employment should get better from here on out.
Economic stats for the week were mixed. Manufacturing, autos, and retail spending data all looked surprisingly robust in December. However, Friday's disappointing employment data left egg yolks streaming down my face. Instead of the 10,000 or so job gains that I expected, the economy actually lost 85,000 jobs!
My miss is another important reminder that projecting (and relying on) monthly data is a very dangerous game. Instead, we should all focus more on the fact that the economy has gone from losing jobs at a pace of well over 700,000 a month early in 2009, to infinitesimal job growth in November, to a small loss in December. I continue to believe that we're on the cusp of showing employment growth sometime very early in 2010.
Remember, though, that job growth is still a lagging indicator. Stronger-than-expected holiday sales, auto sales, and manufacturing orders are far more important for the months ahead than this week's modestly disappointing jobs report. I suppose the one bright side of the weak employment report is that it will put a halt to interest rate increases and commodity price increases, which were concerns of mine. However, I think the respite won't be long.
Robert Johnson, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.